Andy Burnham has been urged by trade union leaders to reintroduce a levy on financial institutions to fund a “social tariff” designed to ease the cost of living for ordinary households. Paul Nowak, the general secretary of the Trades Union Congress (TUC), argued that the policy would directly assist low and middle-income earners with their energy bills.
Under the proposed social tariff model, discounts on utility costs would be determined by household income. The TUC estimates that approximately two-thirds of families could qualify for such relief, generating significant political appeal ahead of the upcoming Budget.
To finance the initiative, Nowak called for the reversal of a 2023 decision by the former Conservative government to cut the bank surcharge from eight percent to three percent. The union federation calculates that restoring this rate would raise £9bn over a four-year period.
Speaking during a BBC interview in preparation for the TUC’s annual congress in Brighton, Nowak emphasized that the next Budget must demonstrate that the new administration is “back in the service of the British people.” While acknowledging that Prime Minister Burnham had started well, he outlined a series of demands for both the prime minister and Chancellor John Healey.
Top of the agenda is action on inflation and energy costs. Nowak noted that millions of families remain anxious about affording heating this winter. He praised Burnham’s recent move to temporarily remove VAT on electricity bills but argued that a structural solution was necessary.
David Davis, representing UK Finance, cautioned that increasing the tax burden on lenders could hinder the government’s goal of delivering economic growth across all regions. The industry body contends that UK banks already face higher taxation compared to competitors in markets such as the United States.
Nowak dismissed concerns that restoring the surcharge might prompt banks to relocate. “I can’t believe banks would leave the UK just because we are restoring the surcharge to where it was in 2023,” he said, pointing out that bank share prices have risen more rapidly in Britain than in New York.
Beyond the banking sector, Nowak advocated for broader tax reforms, including a windfall tax on social media companies and an alignment of Capital Gains Tax rates with income tax. These proposals drew criticism from Lord O’Neill, an economist and advisor to Burnham, who argued that wealth taxes could stifle growth. Nowak countered that a growing economy must work for everyone and that those with “broader shoulders” should contribute a fairer share.
The TUC leader also pressed Healey to maximize borrowing flexibility within fiscal rules to fund re-industrialization and housing targets. Additionally, he called for a review of immigration policies that extend the wait time for permanent settlement from five to ten years for most migrants, a move nowaker described as potentially damaging to sectors already facing severe staffing shortages, such as social care.
Nowak warned that if Burnham failed to deliver “meaningful change,” he risked ceding ground to populist forces on the right. “The onus is on Andy Burnham to show he can deliver what he promised,” Nowak said, adding that failure could lead to a more divisive political landscape.
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